10 Ways a Business Accountant Can Increase Your Profitability
Business owners are often too busy with the day-to-day running of their business to sit down and analyze their accounts. But, those figures in your accounts could hold the key to higher profits. Your accountant will have a wealth of knowledge learned from other businesses in your sector, and companies in different industries as well. That knowledge will help your accountant identify ways that you could boost your profits and increase your cash flow. Here are just ten areas of your business that your accountant might be able to look at to improve your business profitability.
1. Gross Margins
Your accountant can analyze the gross profit generated from each product or service and tell you what your optimum product mix would be. Once you know which of your products make the highest margin, you will be able to allocate more sales effort and resources to the most profitable items. In some cases, you might be able to increase profits by dropping a product.
2. Analyze Costs
An analysis of your costs will highlight any areas where you are spending more than is usual for your type of business. This cost analysis will apply to your raw materials, labor, and your overheads. Your accountant will also be able to look for any unusual expenditure or any trends that might indicate an issue.
3. Improve Your Debts Collection
Unpaid invoices cost you money in finance costs. Your accountant can review your credit terms for you and find ways to improve your collection procedures. Your accountant is also the person to ask about how to minimize the risk of bad debts.
4. Calculate the Return on Your Marketing and Advertising Spend
A lot of business owners do not monitor the return they get on their advertising and marketing. Your accountant can analyze the effectiveness of your advertising and make sure that you are getting a return on your investment.
5. Carry out a Pricing Review
A pricing review will check that your prices are competitive and realistic. You may be under-pricing products to generate demand, but sometimes selling fewer items at a higher price can be more profitable.
6. Calculate the Return on Fixed Assets
If you have invested in fixed assets, it is crucial to know that those fixed assets are paying for themselves. By attributing costs and income to your assets, your accountant will be able to tell you how much of a return you are getting from your investment in those assets.
7. Check for Irregularities
Sadly, employees do sometimes steal from their employers. Your accountant will be able to identify any alter or discrepancies in bank accounts or cash. If employees are taking money or goods from your business, the cost of what they steal will be coming straight off your bottom line.
8. Review Your Financing Needs
If you are spending too much money on short-term finance, your accountant may be able to help restructure your financing. By looking at the finance facilities you have in place now, your accountant may be able to suggest alternative finance that will reduce the amount you spend on interest.
9. Identify Your Most Profitable Customers and Markets
A sales analysis will reveal which of your customers and markets are the most profitable. Your accountant will apply margins to the sales analysis as well as sales volumes. It could be that your biggest customers are not as valuable as you thought they were.
10. Review Your Business Plans
It’s a good idea to run your business plans by your accountant before you put them into effect. Your accountant will be able to take a detached view of your plans for expansion, for example, and see something that you had missed.
Some business owners view their accounts as little more than a necessary bookkeeping exercise. But, hidden away in those numbers are the figures that will help you run your business profitability. Your accountant is the person who can unlock those numbers for you and use them to help you run a thriving business.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days. Call us today for more information at 855.382.6153.